Thursday, April 26, 2012

Diversity Top 50: "Making the List"

Publishers publish lists because they think readers swarm to them. There are lists (and rankings) for almost everything. There is a cottage industry of lists. Some are frivolous, many are arbitrary, and others are humorous. Most are meant to sell magazines and newspapers or attract attention. Some are a serious attempt to report a trend or celebrate the efforts and programs of participating institutions. Lists occasionally confuse, because students, readers, consumers, and business people who peek at them don't know what is subjective, credible or useful.

Finance professionals rush to see deal lists, underwriting rankings, league tables for transactions, M&A rankings or rankings of the best capitalized financial institutions. The list of business-school rankings can be useful, except what list is most reliable or captures the correct attributes of an MBA education? What list is updated and, beware, what list uses irrelevant criteria? There are many b-school lists--from the Economist and BusinessWeek to U.S. News, Financial Times, and (occasionally) the Wall Street Journal.

One current list always seems to be useful or eye-opening. Useful for business professionals to detect and evaluate opportunities. Useful in making decisions about where to pursue a career or where there might be, say, a legitimate chance for a woman to become CFO. Useful in determining what companies value input of all employees from all backgrounds. The rankings probably change with minimal variation from year to year. What better way, however, to determine more fairly whether companies are practicing what they preach or what they espouse in mission statements on the front of annual reports.

That would be a list of the top U.S. companies for diversity. Many magazines or organizations produce diversity lists from time to time--including Black Enterprise magazine. The latest list comes from the publication Diversity, Inc.--which this week produced its list of the top 50 companies in diversity (its 13th year). It also presented various subsets of the same--top companies in diversity for executive development, recruiting, culture, Asian-Americans, blacks, Hispanics and LGBT communities.

All lists purport to be (or pretend to be) the results of objective measurement and inputs. All lists present what they claim are objective criteria. The mere selecting (and omitting) certain criteria that they say will be used objectively is a subjective process. Thus, all lists are subjective. But where possible, readers can glean invaluable information or trends and find out what they want to know: Who's walking the walk, talking the talk?

In Diversity's list, financial institutions, particularly large banks, brokerage firms, asset managers and dealers, aren't prominent. That's not new. Most large, notable financial institutions have legitimate diversity programs and have made laudable efforts the past decades. Financial institutions, however, aren't necessarily pace-setters in diversity. They have been embroiled in turmoil the past years, and banks, insurance companies and broker/dealers continue to fight to survive, remain relevant and must navigate the burden of reams of regulation.

Let's get the criteria out of the way first. Diversity, Inc. used four primary criteria--CEO commitment, human capital, corporate communications, and suppliers. It sent surveys to over 1,000 participants and asked them to respond to a booklet (perhaps overwhelming to some) of over 300 questions.

In the latest list from Diversity, Inc., the accounting/consulting firms fare the best for diversity among financial services companies. Pricewaterhouse led the entire list, Ernst & Young and Deloitte squeezed into the top 10, and Accenture and KPMG are in the top 25.

Card companies American Express and Mastercard are also in the top 25. Insurance companies do well, too. Aetna, Prudential, MetLife, and AllState make the top 50.

One common thread among these names is that most have large, diverse bases of customers. Because those who purchase their products are diverse, they will be sensitive to, aware and respectful of the importance of diversity--diversity among employees and diversity in senior management.

Bank of America, Capital One, and Wells Fargo have the same--customers in the millions, branches in the thousands, a presence in just about every state in the Union, and an appreciation that all who use their services (mortgages, credit cards, wealth management, etc.) come from myriad backgrounds. All three make the top 50 in 2012.

Some prominent well-known financial institutions are missing: Goldman Sachs, Morgan Stanley, JPMorgan Chase, and Citi don't make the top 50. Indeed they are institutions that would happily participate in providing survey responses and aspire to be on the list. They likely took the time to fill out surveys and answer questions thoroughly and use the platform to boast about progress and special efforts (e.g., MBA fellowship funding for under-represented groups at JPMorgan and Goldman). Diversity, Inc. concluded they hadn't done enough, or other companies do more.

Many other finance firms won't be found, because they hesitated to participate, are embarrassed with their efforts, disagree with the idle exercise of surveys and lists, or deemed this is not a priority: hedge funds (Citadel), securities exchanges (NYSE, CME, Nasdaq), institutional trading firms (BCG Cantor, Jefferies, Knight), asset managers (BlackRock), retail brokerages (E*Trade, Scottrade), and private-equity firms (Blackstone).

Some of the same above don't have the required 1,000 employees to be included. Some are "all right" with diversity or will proclaim they are '"for it," but haven't devoted resources, energy or passion. Some might argue they have legitimate programs, but don't think it's necessary to flaunt their efforts by devoting resources to complete pages of survey questions. Most firms, however, will bother, because they don't like the market penalty they risk taking (among customers, especially), if they are not on the lists.

Pricewaterhouse and Ernst & Young were highlighted for recruiting and retention and promoting women into executive positions. Deloitte was noted as a top firm for Hispanics, while Wells Fargo was cited as the best in community development. American Express is in a top 10 for developing women for senior roles.

Consortium sponsors do well in these surveys and lists. That's no accident. They include past and current sponsors (including financial-services companies American Express, Deloitte, Wells Fargo, Bank of America and KPMG). The same resolve they have in sponsoring and recruiting from pipeline/inclusion programs such as the Consortium (and Toigo, SEO, MLT, and others) is the same resolve they have in promoting employees, developing senior managers and celebrating the differences and input from people of all backgrounds.